Massachusetts’ securities regulator has reportedly launched a probe over Robinhood’s prediction markets providing that has allowed customers to wager on the outcomes for a slew of occasions, together with basketball tournaments.
Reuters reported on March 24 that Massachusetts Secretary Invoice Galvin stated his workplace subpoenaed Robinhood final week to get data on its advertising and marketing supplies and the variety of Massachusetts-based customers that traded sports activities occasions contracts on faculty basketball tournaments.
Galvin stated he was involved the buying and selling platform was “linking a playing occasion on a well-liked sports activities occasion that’s particularly common to younger individuals to a brokerage account.”
“That is simply one other gimmick from an organization that’s superb at gimmicks to lure buyers away from sound investing,” he added.
Robinhood launched a prediction markets hub on March 17 that may be initially out there by means of the Commodity Futures Buying and selling Fee-regulated prediction platform Kalshi and would characteristic occasion contracts on faculty basketball tournaments and the Could federal funds charge.
A Robinhood spokesperson advised Cointelegraph that the occasion contracts “are regulated by the CFTC and provided by means of CFTC-registered entities.”
“Prediction markets have turn out to be more and more related for retail and institutional buyers alike, and we’re proud to be one of many first platforms to supply these merchandise to retail clients in a secure and controlled method,” the spokesperson stated.
Robinhood Markets (HOOD) share value remained comparatively flat after the shut of buying and selling on March 24 after an over 9% leap over the day to shut at $48.36, in accordance to Google Finance.
Robinhood is up almost 30% thus far this 12 months however has fallen from its Feb. 14 all-time peak of $65.28. Supply: Google Finance
The CFTC and Galvin’s workplace didn’t instantly reply to requests for remark.
Occasion contracts are agreements that permit customers to wager on the result of primarily something, from sports activities video games to election outcomes and the worth of cryptocurrencies.
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They have been popularized on the blockchain-based prediction market Polymarket and non-decentralized rival Kalshi and have caught the ire of some regulators.
Final month, Robinhood scrapped occasion contracts permitting for bets on the Tremendous Bowl a day after launching the merchandise after the CFTC requested it to.
The Massachusetts probe additionally requested Robinhood hand over inside communications concerning the choice to roll out the current faculty basketball occasions contracts after the CFTC’s request to cease the Tremendous Bowl contracts.
The CFTC additionally reportedly requested Kalshi and Crypto.com early final month to elucidate how each of their Tremendous Bowl occasion contracts complied with derivatives rules.
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